NEW YORK, Nov 5 (Reuters) - A key gauge on U.S. interbank borrowing costs fell for the first time since August on Friday as trading volume rose to its highest level in over a month, implying less strain in money markets, New York Federal Reserve data released on Monday showed.
The "effective," or average, interest rate on what banks charge each other to borrow excess reserves was 2.19 percent on Friday, down from 2.20 percent the day before. This was the first decline on this rate, which the Federal Reserve controls to conduct monetary policy, since Aug. 31, according to New York Fed data.
The effective fed funds rate was below the interest the Fed pays banks on their excess reserves (IOER) for the first time since Oct. 22.
There have been concerns that the fed funds rate would rise above IOER, which may raise worries about whether the U.S. central bank is losing its grip on monetary policy.
Among other money market rates, the three-month overnight indexed swap (OIS) rate, which reflects traders' expectations on the federal funds rate, edged up to 2.300 percent from 2.298 percent on Friday.
Reporting by Richard Leong Editing by Chizu Nomiyama